Analysts Who Follow Howe Industries Recently Noted That, Relative to the Previous

question 52

Multiple Choice

Analysts who follow Howe Industries recently noted that, relative to the previous year, the company's operating net cash flow increased, yet cash as reported on the balance sheet decreased.Which of the following factors could explain this situation?

• A)The company cut its dividend.
• B)The company made a large investment in a profitable new plant.
• C)The company sold a division and received cash in return.
• D)The company issued new common stock.
• E)The company issued new long-term debt.

Recognize solvency and profitability measures in financial analysis.

Analyze the interests of shareholders towards company profitability, solvency, and marketability.

Calculate and interpret non-GAAP financial performance measures.

Understand the significance and computation of asset turnover ratios.

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Definitions:

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor, including expenses such as rent, utilities, and equipment depreciation.

Predetermined Overhead Rate

An estimated rate used to allocate indirect costs to products or services, based on a selected activity base such as machine-hours or labor-hours.

Direct Labor-Hours

The overall hours spent by staff directly participating in creating goods.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as utilities, rent, depreciation, and salaries of indirect labor, which are not directly traceable to specific products.